Baidu has no collaboration with any military institution, the company told China Daily exclusively amid some concerns that one of China's university lab links to the People’s Liberation Army’s Strategic Support Force has connections to the company's commercial large language model - Ernie.

China Daily identified an article by the South China Morning Post, later picked up by Bloomberg, that purported a claim that "is false and needs clarifications" according to Baidu. The story has resulted in 10 percent of Baidu's market value being shaved off.

Baidu's Ernie service is open to the public, and any organization or individual can register and ask questions through the public network, just like users can access ChatGPT without identifying their connection to any organization. There is no situation where Baidu customized the research, the company told China Daily.

The story by South China Morning Post was based on a research paper in a Chinese military journal. Authors of the paper claimed they input questions to Ernie and received responses. China Daily noted that the paper also utilized several other large language models ("LLM") such as GPT-3.5, GPT-3.5-turbo, GPT-4, and HTML-T5, in its research.

Baidu said in a statement that the company is committed to operating its AI related products and businesses in compliance with applicable laws and regulations and best corporate practices.

It's another black-swan incident similar to the market disturbance after China's proposed gaming policy. The market has become sensitive after being subjected to rounds of toxic Western propaganda that fabricated problems in China's economy by its geopolitical rivals.